Obama: Uncle Sam Chips In for Retirement?

Approximately 78 million working Americans are currently working jobs that do not provide them with a retirement plan; however, Barack Obama is looking to change this predicament, according to a report by CNNMoney.com.

Recently while campaigning, Sen. Obama proposed that companies establish and automatically enroll workers in IRA-type savings plans where employees would deposit 3% of their salary for retirement, most likely into a low-cost index mutual fund. Unless an employee decides to opt-out, the government would match a portion of the money contributed, up to $500 for families that earn less than $75,000.

These steps will put a secure retirement within the reach of millions of Americans, said Obama last Friday in an Ohio campaign speech.

According to the Tax Policy Center, a nonpartisan policy institute in Washington D.C., Obamas proposal could cost the federal government upwards of $18.8 billion annually. These IRAs could potentially mature into considerable six-figure accounts, given strong average rates of return after inflation, yet some remain hesitant about the notion of automatic enrollment.

For Obama to make it mandatory doesnt work for me because it doesnt work for a lot of my employees who just dont want to participate, said Douglass Henry Jr., a chief executive of Henry Molded Products.

On the Republican side of things, John McCains senior policy advisor Douglas Holtz-Eakin said that the presumptive Republican nominee plans on unveiling a detailed stance on this issue of retirement savings later on in the summer.

Currently, McCain supports payroll deduction for workers without 401(k)s and he also backs auto-enrollment for individuals with 401(k)s.